Amendments made to conditions and goods exempted in relation to persons entering Malaysia

The Sales Tax (Persons Exempted from Payment of Tax) (Amendment) (No 2) Order 2021 has been gazetted and comes into operation on 1 July 2021. The order amends the following:

• • Item 16: Amendments in relation to any persons entering Malaysia (other than designated area) through all modes excluding air. The list of goods exempted and conditions under this item have been amended.
• • Item 16A: A new item has been added in relation to any person entering Malaysia (other than designated area) through air mode.
• • Item 17: Amendments in relation to any person entering Malaysia from designated area. The list of goods exempted and conditions under this item have been amended.

(Note: For further information about our Sales and Service Tax (SST) subscription, contact us at my-sales@wolterskluwer.com (Malaysia).

Working From Home: Legal Issues and Concerns

 This article is written by Amardeep Singh Toor (Partner) and Alycia Tan Wei Wenn (Associate) (Lee Hishammuddin Allen & Gledhill) (LHAG) and was published  in September 2020. Reproduced with permission from LHAG.

The COVID-19 global pandemic has made working from home (WFH) become more commonplace than the daily commute to the office. Even with the gradual lifting of the movement restrictions in Malaysia, many employers continue to encourage WFH arrangements. There are undeniably many advantages, for employers and employees alike, in having a WFH arrangement. Employers should, however, be aware of the various legal issues and concerns that come with working remotely.

Confidentiality and cybersecurity

Confidentiality and cybersecurity are issues of paramount concern in every organisation. Leaking or disclosing confidential information constitutes a serious act of misconduct, even where it is unintended.¹   In the same vein, there are severe consequences arising from an employee’s act of providing unauthorised persons with access to company property, such as by divulging his login credentials for an internal system.² 

WFH arrangements create room for the unintended leakage or disclosure of confidential information by employees and give rise to potential cybersecurity risks. An example may be where an employee allows a family member to use his work laptop or leaves the laptop unattended while confidential documents are left open and/or easily accessible. Another possible scenario is where the employee does not use a secured Wi-Fi or a virtual private network when working on the laptop, hence leaving it vulnerable to a cyber-attack.

Considering the above situations, employers should take steps to ensure that confidential transactions, deals or documents are not in any way compromised by employees who are WFH. Documents should be stored under lock and key, especially if the employee does not live alone or if his workspace is frequented by others. Employers who provide work laptops to employees need to regulate their use to ensure that employees always keep them secure. Employers should also set out clear protocols for employees to follow in the event of a cyberattack so that employees are well-equipped to manage cybersecurity risks presented by WFH arrangements.

Health and safety

Every employer has a duty under the law to ensure, so far as is practicable, the safety, health and welfare of all his employees at the office.³   It is relatively straightforward for employers to take such health and safety measures when their employees are working at a place under their control. Employers, however, do not have the same sway when it comes to an employee’s home.

Issues may arise should an employee sustain an injury during normal working hours while WFH. Employers may face difficulties in determining whether the injury can be classified as an “occupational” injury if the employee had sustained it while carrying out a non-work related activity. There should be clear instructions and procedures for reporting work-related injuries sustained during WFH arrangements.

Employers should also be wary that there may be a need to review existing insurance policies to ensure that their WFH arrangement does not contravene any terms and conditions of such policies.

Time management

While WFH can boost employee morale due to the obvious savings in costs and lower stress levels associated with commuting, WFH may also give rise to disciplinary concerns, especially in the aspect of time management.

WFH arrangements inevitably cause a blurring of lines between working and non-working hours. This may lead to employees working at irregular or erratic hours instead of their normal working hours. Employees may even be uncontactable during working hours, leading to unnecessary delays in completing tasks. For employees covered by the Employment Act 1955,⁴   WFH arrangements may also lead to dubious overtime claims if not properly regulated.

Employers will need to seriously consider effective steps to manage these disciplinary concerns arising from WFH arrangements. This may include the implementation of appropriate mechanisms to monitor timekeeping for employees, especially those who are entitled to overtime claims.

Assessment of probationers and performance

WFH arrangements present considerable challenges in assessing the performance of employees. This is especially so in regard to a probationer. It is trite law that employers need to provide a fair opportunity for a probationer to prove his suitability for permanent employment.⁵   In doing so, the employer would need to assess whether the probationer possesses the right skill, competence, temperament, aptitude, attitude and suitability.⁶ 

It may not be too difficult to monitor a probationer’s skill or competence while he is WFH. Without face-to-face interactions, however, employers may find it challenging to assess a probationer’s temperament and attitude having regard, inter alia, to the organisation’s corporate culture.

Employers may need to consider how they can reconfigure their employee performance management system, including yearly appraisals and performance improvement plans, to cater to WFH arrangements.

Conclusion

WFH arrangements are being increasingly accepted as part of the “new normal” and the practice appears to be here to stay as long as the global pandemic persists. With WFH being a relatively new practice among Malaysian organisations, employers may find themselves struggling to navigate through the waves of various legal issues and concerns that may come with the implementation of WFH arrangements.

It is imperative for employers to implement a written WFH policy to manage and address such issues and concerns as failure to do so can have serious implications.

Footnotes

1      Robert TI v ECM Libra Avenue Securities Sdn Bhd [2013] 1 ILR 112

2      Mohd Rosli bin Mohd Noor v Perodua Sales Sdn Bhd (Industrial Court Award No 2329 of 2019)

3      Occupational Safety and Health Act 1994 [Act 514], s 15(1)

4      Employees who are covered by the Employment Act 1955 are as follows:

          (a) any person who, irrespective of his occupation, has entered into a contract of service with an employer under which his monthly wages does not exceed RM2,000 a month; or

          (b) any person who, irrespective of the amount of wages he earns in a month: (i) is engaged in manual labour; (ii) is a supervisor of employees engaged in manual labour; (iii) is engaged in the operation or maintenance of any vehicle used for transport of passengers or goods or for reward or for commercial purposes; (iv) is engaged in any capacity in any locally registered vessel but is not a certified officer; or (v) is engaged as a domestic servant.

5      Inti Iabs Sdn Bhd (Inti College Sarawak) v Frank Samuel Agong [2000] 3 ILR 204

6      Roslan Baba v Puncak Niaga (M) Sdn Bhd [2013] 3 ILR 216

 

Note: For further information about our Employment and HR subscriptions, contact us at my-sales@wolterskluwer.com (Malaysia).

Tourists to pay tax on accommodations booked online

From 1 July 2021, tourism tax will be levied on a tourist staying at any accommodation premises booked online through a digital platform service provider. The order has been gazetted on 16th March 2021. 

Note: For further information about our Tax subscriptions, contact us at my-sales@wolterskluwer.com (Malaysia).

Malaysia's Indirect Tax - What's new

The following bills have been passed in Parliament: 

• Tourism Tax (Amendment) Bill
• Service Tax (Amendment) Bill
• Sales Tax (Amendment) Bill
• Customs (Amendment) Bill
• Free Zones (Amendment) Bill
• Excise (Amendment) Bill

The Tourism Tax (Amendment) Bill  seeks to make the following changes:

• Tourism tax will be levied on accommodation premises made available through online booking.
• The tourism tax shall be collected from a tourist by the digital platform service provider who made the accommodation premises available through online booking, and pay this tax to the Director-General.

The Service Tax (Amendment) Bill seeks to clarify:

• That any registered person who ceases to carry on the business of providing any taxable service should notify the Director-General in writing within 30 days from the date of cessation. 
• The Director-General will refund any balance in the amount of the refund after a registered person has made a deduction.

The Sales Tax (Amendment) Bill seeks to: 

• Empower the Director-General to direct any registered manufacturer to deduct the amount of refund from the amount of sales tax to be paid from the return. 
• Empower the Director-General to withhold any amount of refund to be credited to any following or subsequent taxable period.
• Empower a proper officer of sales tax to seal goods that cannot be removed due to their nature, size or quantity.
• Provides creditability of an agent provocateur's evidence. 

These bills: Customs (Amendment) Bill, Free Zones (Amendment) Bill and Excise (Amendment) Bill

• Empowers a senior officer of  customs in relation to enforcement, investigation and inspection.
• States that the evidence of an agent provocateur is admissible.
• States that under the Customs and Excise (Amendment) Bill, the Director-General may authorise nine-tenths of the paid duties to be repaid as a tax return if the goods are re-exported after the duty has been paid.

(Note: For further information about our Sales and Service Tax (SST) subscription, contact us at my-sales@wolterskluwer.com (Malaysia).

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Upcoming 2021 Budget

 

Two more days to go for our 2021 Budget. We are all looking forward for the budget as we see so many news on the budget expectations and measures that associations/professionals are proposing. 

Especially during though times like this due to the Covid-19 pandemic, our upcoming budget will help us in so many ways. There are so many proposals for tax rate reductions and tax reliefs. Our Finance Minister stated that the Ministry had received about 6.600 proposals for the upcoming budget. Tax rate deductions for both corporate and individuals will really ease the burden off our shoulders. 

Companies will be able to stable up their cash flow and individuals too. However,  a decrease in the tax rates would be challenging for the government. There are many proposals for SST exemptions on certain goods as well. 

The government need to focus on keeping Malaysians employed too as many of them had lost their jobs or had a pay cut. 

We will have to wait until 6th November for our 'new normal budget'  to see what's in store for us! (in a new normal situation). 

Financial Accounting and Reporting in Malaysia, Volume 2 – 7th Edition is here!

Financial Accounting and Reporting in Malaysia, Volume 2 – 7th Edition is now available for purchase!

This 7th edition comprises new, revised and expanded content from the previous edition, including the new and amended Malaysian Financial Reporting Standards (MFRSs) issued after 31 December 2017. A new chapter on corporate social responsibility reporting, integrated reporting and sustainability reporting has been included in this edition.

Financial Accounting and Reporting in Malaysia explains clearly the Conceptual Framework used in the preparation of financial statements for entities, including groups of companies, and how to analyse and interpret those financial statements. With a clear emphasis on local practices, accounting principles are discussed in detail to guide users on the preparation and presentation of financial statements to ensure compliance with the latest accounting pronouncements. Where applicable, comparisons are also made with statutory requirements and guidelines issued by the Securities Commission and the Central Bank of Malaysia.

About the Author: Tan Liong Tong is a respected and experienced author on financial reporting practices. He has served in various working committees of the Malaysian professional accountancy bodies, including as a Council member of the Malaysian Institute of Certified Public Accountants (MICPA), a member of its Accounting and Auditing Technical Committee and a member of the Accounting & Auditing Standards Committee of the Malaysian Institute of Accountants (MIA).

To order, existing customers can contact your regular Account Manager. New customers can visit our online store.

Beyond the movement control order: employment & HR issues

Authors: Donovan Cheah (Partner) and Zi-Han Lim (Associate) (Donovan & Ho)

www.dnh.com.my

With the movement control order (MCO) creating many novel workplace issues, many employers are still struggling to adjust to what it means to have “business as usual” during the MCO.

Once the MCO is lifted fully, workplaces will likely not be able to return to normal. The possibility of restrictions to promote social distancing to curb the spread of the COVID-19 virus may become a necessity and thus, compulsory. The HR function will, therefore, play a pivotal role in balancing the welfare of employees, with the need to minimise interruptions to business operations.

As businesses look ahead, here are some employment and HR issues that employers need to consider:

          1. Implementing safety and sanitisation measures

Employers should re-evaluate their current safety measures to prevent the spread of the virus in the workplace. This include:

          • having hand sanitisers at every entrance of the Company’s premises

          • imposing a mandatory sanitisation policy for visitors

          • providing face masks

          • ensuring proper distancing in the seating arrangements for employees

          • putting up notices to remind employees of hygiene standards

          • imposing temperature checks on all visitors and employees prior to entry to the premises

          • imposing a stricter health policy such as prohibiting sick employees from working at the Company’s premises and requiring them to take sick leave, and

          • setting a travel policy to restrict non-essential business travel and to remind employees not to travel to high-risk locations even in their personal time.

          2. Remote working/work from home

The MCO has shown us that for some businesses, working in the comfort of your own house can still be productive. Employers are able to continue this even after the MCO has been lifted, or introduce a rotation policy where different departments can take alternate weeks off to work from home while the remaining ones can work in the office.

          3. Limit face-to-face meetings

The MCO has also demonstrated that many face-to-face meetings are non-essential, and businesses can still communicate with their customers and employees using technology. Employers can, therefore, limit the need for physical meetings by using software, such as Google Hangouts, Zoom, Whatsapp video calls or Facetime. This approach will also complement any work from home policy that is implemented.

          4. Security

If working from home will be considered the “new normal”, employers need to look into whether they have adequate infrastructure for cyber security to support remote working. There is an increased risk of a breach as employees may not be logged into your organisation’s network and may be using their own devices. As there is less need to meet people face-to-face, there will be a corresponding increase in the need for authentication and authorisation whenever employees are dealing with third parties, preventing attacks, such as phishing and malware. This is especially if the employees are dealing with sensitive or confidential information. As such, employers should re-evaluate whether there are any security gaps in their IT infrastructure that need to be addressed, as this is a worthwhile, long-term investment given that the way we work is now changing very rapidly.

          5. Cost-cutting measures

When the MCO is lifted in full and employees are allowed to go back to work, given the current economic climate, companies should still look into practical cost-cutting measures to ensure long-term sustainability of their operations. From an HR perspective, this could include eliminating or suspending non-essential fringe employee benefits, such as corporate gym memberships, company dinners and entertainment or lifestyle/clothing allowances. Discretionary bonuses or incentives can also be limited, reduced or removed.

          6. Reviewing HR guidelines

Given the impact of the COVID-19 outbreak, HR guidelines and policies ought to be reviewed to ensure that they are adequate to support any measures that the Company intends to take and that they are also commensurate with the Company’s current financial standing and the overall economic climate.

As mentioned above, “nice to have” but not essential fringe benefits may have to be looked into especially if they are offered to employees in writing via company policy or in their contract of employment. Crucial policies that may impact the Company’s financial position and salary costs, such as retrenchment benefits, promotions, bonus and increment, must be re-looked at this juncture. Other policies that are worth updating would include IT policies/use of own devices policies, confidentiality policies and remote working/flexible working hours policies.

Preparation is the best defence against turbulent times, and thinking beyond the MCO may be crucial if a company intends to stay afloat.

(Note: For further information about our Asia Pacific Employment Law subscription, contact us at my-sales@wolterskluwer.com (Malaysia) or sg-sales@wolterskluwer.com (Singapore)).

Emotional intelligence – valuable skill to create a harmonious workplace

By Kavitha Kesavan (Content Management Analyst)

Emotional intelligence (EI) is the ability to be smart with emotions as it plays an essential part in fostering positive working relationships in an organization. IQ will get an employee hired, but EI is the ability to interact effectively while managing their own emotions and others’ emotions that will help someone move up the career ladder and determine success in life.  Individuals communicate better, reduce their anxiety and stress, avoid conflicts, improve relationships, empathize with others, and effectively overcome life’s challenges with high level of EI.

An interesting question and answer by Daniel Goleman is extracted from http://www.danielgoleman.info/social-skills-and-eq on social skills.

Q: Having good social skills is another component of EQ, but does that mean people who are shy or introverted don’t have as high an EQ? Again, how can one improve social skills?
Social competence takes many forms – it’s more than just being chatty. These abilities range from being able to tune into another person’s feelings and understand how they think about things, to being a great collaborator and team player, to expertise at negotiation. All these skills are learned in life. We can improve on any of them we care about, but it takes time, effort, and perseverance. It helps to have a model, someone who embodies the skill we want to improve. But we also need to practice whenever a naturally occurring opportunity arises – and it may be listening to a teenager, not just a moment at work.

Daniel Goleman, psychologist and author of the best-selling book Emotional Intelligence, established the importance of EI to business leadership and defined five main qualities that make up EI.

Self-awareness 

Self-awareness is the ability to recognize and understand one’s own emotions and moods and know how this can impact ourselves, others, and our environment. Strong self-awareness means having a clear understanding of each own’s strengths and weakness and operating with humility and kindness.

Employees with low level of EI often demonstrate direct their mood swings to certain colleagues and employees with high level of EI will be able to understand their colleagues’ emotions and will be able to accept and accommodate accordingly. This may cause conflict and uneasiness in a workplace if the employees with low EI are not willing to seek ways to change their habits as it is difficult to work with such colleagues. Speaking out with a trusted people who will be able to help the employees and attending motivational courses will be to assist employees who are keen in the journey of creating a high EI workplace.

Self-regulation

Daniel Goleman said, “When emotions are running high, they certainly cannot be ignored – but they can be carefully managed. This is called self-regulation, and it’s the quality of EI that liberates us from living like hostages to our impulses.” Leaders demonstrating EI will keep their worst impulses and distressing emotions under control and remain stay calm and effective in the most challenging times, such as during the COVID-19 pandemic. They will be able to understand the stress that employees face on a daily basis in global, complex, and high-pressured work environments. An approachable leader with self-reflection will be able to retain talents at workplace as they will comfortable and motivated to work with an emotionally balanced leader and environment.

Motivation

Self-motivated people have a passion to work with extremely high standards for the quality and pursue goals with persistence. They are not solely motivated by money or titles, but find the motivation within themselves. A highly EI team will help improve productivity of the workplace tremendously as they have a personal drive to improve and achieve, committed to goals, take initiative to complete a task, and readiness to act on opportunities, and optimism and resilience.

Apart from self-motivation, EI also includes on how we motivate others in a team. People with positive energy and vibes often inspire others to be super motivated, especially during a challenging situation. This will help retaining good employees, and creating a sense of loyalty which means they are more likely to work harder for employers.

Psychologist Abraham Maslow’s Hierarchy of Needs Theory is relevant in identifying factors essential for employee motivation. Usually a person beginning their career will be very concerned with physiological needs such as adequate wages and security needs to fulfill the basic need for food, water and shelter etc. Workplace hazards should be addressed and resolved immediately to ensure employee’s safety is guaranteed and they do not feel threatened.

Employees desire to work in an environment where they are accepted in the organization and have some interaction with others. Therefore, creating a workplace that harbors opportunities for participation and interaction with others to promote a sense of belongingness is encouraged.

The need for appreciation and respect is another important element for motivation.  A strong level of self-esteem can make you feel better and gives a boost to your confidence that can make you feel empowered and perhaps, even improve your relationships at workplace. Meaningful job title, job perks, awards, a nice office, business cards, workspace, etc. are also important to an employee’s esteem.

Self-actualized people seek fulfillment and change through individual development. Self-actualized employees have leadership traits and are always prepared for new enhancements and challenges in relation to their job and are prepared to move out of their comfort zone. Self-actualized people are humble, not disturbed by small matters and are able to accept their flaws for growth.

Empathy

Empathy is the capacity to feel compassion for others, put yourself in their shoes and have an understanding to help them in times of need. Offering a genuine response to people’s concerns and connecting with them will be able to retain talents at workplace. Allowing flexible working arrangements for employees that need to care for kids or elderly parents is an encouraged approach.

Employees are much more likely to work smoothly with a friendly face versus someone that’s cold or unapproachable. For instance, if a new co-worker is having trouble adhering to a particular workplace culture or policy, co-workers tend to assume that they are being negligent or otherwise aloof. However, chances are they require time to adapt to the new culture. Co-workers with high level of EI will give the new hire the benefit of the doubt, respect their way of getting adjusted to the new culture and make them feel comfortable in the workplace before passing judgment on their behavior in the office. Practicing patience with your co-workers is a key to demonstrate empathy.

Social skills

Social skills are the ability to interact with others that are considered as fundamental to human development (Odom et al. 1992).  Good relationships at workplace will help people to get along well with others and help to perform better at jobs as they will feel comfortable approaching their co-worker for a discussion. When you show respect for others by being polite and using good manners in the workplace, people will show respect for you. Active listening which means being fully engaged while listening to someone talk also represent a good social skill.

Gossiping is definitely NOT part of strong social skills even though gossipmongers tend to be “friendly” to get their message through to lower a colleague’s reputation in the eyes of other colleagues due to their jealousy or insecurity. Gossipmongers are indisputable cancer in the workplace.  Workplace gossip leads to attrition due to good employees leaving the company because of an unhealthy work environment. Gossiping tends to erode morale, hurt feelings and reputations, lowers productivity and creates divisiveness among employees as people take sides. A rule of thumb to identify gossips would be, “if you would not be saying that about me in my presence, then it should be avoided.” Warning or terminating a gossipmonger acts a deterrence to other employees to respect other co-workers and to keep the positive vibes ongoing.

A workplace with high EI culture encourages retention of employees, loyalty and improved work performance as a happy and healthy workplace environment is highly beneficial for employees’ productivity and profitability of organizations.

(Note: For further information on workplace ethics in our Asia Pacific Employment Law and Singapore Hands on Guide - HR Manager subscriptions, contact us at sg-sales@wolterskluwer.com (Singapore)).

2021 Budget

Our Finance Minister, Tengku Datuk Seri Zafrul Tengku Abdul Aziz announced that our 2021 budget will consist of four broad themes:-

• Caring for the people
• Steering the economy
• Sustainable living
• Enhancing public service delivery

Caring for the people

This theme will prominently feature education, employment, social protection and social mobility. The government wants to build new foundations for our economic and and social systems to create a fairer and more wholesome future. 

Steering the economy

This theme will consist ensuring gross domestic product (GDP) growth for 2021, increasing foreign direct investment (FDI) and consumer confidence. 

Sustainable living

Despite the Covid-19 pandemic, the momentum for sustainable investing had not slow down. In fact, companies that embraced and practised environmental, social and governance (ESG) performed better. In Malaysia, our current ESG related incentives include:

• Tax exemptions for management fee incomes for fund management companies managing socially responsible investing (SRI) funds and syariah compliant funds
• The extension of tax deduction for the cost of issuing SRI sukuk
• The extension of the green investment tax allowance (GITA)
• Green income tax exemption (GITE)

Enhancing public service delivery 

Under this scheme, the government intends to support the people and businesses and become more outcome-focused in a targeted manner. Tengku Zafrul said the measures introduced should be impacting live and livelihoods in a meaningful way and not just about the amount of funds disbursed. 

The upcoming budget is scheduled to be tabled on 6 November 2020. We'll just have to wait patiently until then! 



Lochana Nanthacumar

Content Management Analyst

Wolters Kluwer Malaysia

What's in for tax in the Government's Economic Recovery Plan?

So, the Economic Recovery Plan that we were all looking forward to is out. Let's take a look at some of the incentives announced under Penjana.

For Business: 

• For the period from 1st July 2020 up to 30th September 2020, a 50% remission of penalty will be given for late payment of sales and service tax due and payable.
• An extension of special deduction equivalent to 30% of rental reduction for SMEs up to 30th September 2020.
• A special deduction for renovation and refurbishment business premises is extended until 31st December 2021.
• An extension of accelerated capital allowance on eligible capital expenses including ICT equipment up to 31st December 2021.
• For the period between 1st July 2020 to 31st December 2021, an income tax rebate up to RM20,000 per year for 3 years of assessment will be given to newly established SME.
• Extension of period of deferment of tax installment payment for tourism industry is extended to 31 December 2020.
• Extension of service tax exemption for hotels up to 30th June 2021
• Extension of tourism tax exemption from 1st July 2020 to 30th June 2021
• For the period between 1st July 2020 to 30th June 2021, stamp duty exemption will be given to SMEs on any instruments executed for Mergers and Acquisitions (M&As)

For personal:

• Income tax exemption of up to RM 5,000 can be claimed by employees who receive a handphone, notebook and tablet from their employer for working from home
• Increase of income tax relief for parents from RM 2,000 to RM 3,000 on childcare service expenses
• eVouchers of RM 800 will be given per household for subsidy of childcare expenses for mobile childcare services
• Special individual income tax relief of up to RM 2,500 on the purchase of handphone, notebook and tablet
• Income tax relief for domestic travel of up to RM 1,000
• Stamp duty exemption for name transfer letters and financing agreements for properties under  Home Ownership Campaign (HOC)
• RPGT exemption on disposal of residential homes from 1st June 2020 to 31st December 2021.
• 100% sales tax exemption on locally assemble cars and 50% on imported cars. 

Lochana Nanthacumar

Content Management Analyst

Wolters Kluwer Malaysia

Tax Return Form Deadlines

Taking into consideration our current economic situation due to the Covid-19 pandemic, Inland Revenue Board of Malaysia (IRB) has extended the tax returns deadlines up to two months, aimed to reduce the tax payer's burden. The tax forms and the revised deadlines are as follows:

• Form BE : 30th June 2020
• Form B    : 31st August 2020
• Form E    : 31st May 2020 

* Form BE is to be submitted by individuals with no business income.

* Form B is to be submitted by individuals with business income.

* Form E is to be submitted by the employer. 

Don't forget to submit your respective tax return forms on time to avoid late penalty submission and stay safe during this pandemic! 

Lochana Nanthacumar

Content Management Analyst

Wolters Kluwer Malaysia

Tax Relief Proposals for SMEs

This article is written by S. Saravana Kumar and Yap wen Hui and was originally published in the Malay Mail. Reproduced with permission.

The movement control order (MCO) has affected all of us, from individual and businesses. However, as majority of the business establishments in Malaysia are small and medium enterprises (SMEs), they are the worst hit sector in Malaysia. Although the SMEs welcome the extension of time for tax filings and payments, they are seeking for more assistance from the Government such as some special tax relief. Some additional tax relief measures that the Government can consider are:-

• A lower corporate tax rate or a tax rebate of RM 250,000 in the year of assessment (“YA”) 2020 for SMEs that do not retrench its employees. The tax rebate can be modified depending on the SMEs turnover size and number of employees.

• Double deduction on all financing costs such as interest, guarantee fees, arranger fee etc on the financing obtained by SMEs in 2020 provided the financing is used wholly as working capital for the SMEs’ business and there is no retrenchment of employees.

• Double deduction on expenses incurred to purchase equipment to facilitate the work from home concept during the MCO period. This can include the expenses to purchase laptops and subscribing to online communication applications.

• Double deduction on office, factory, warehouse and workers’ hostel rental expenses for at least 6 months beginning March 2020 or alternatively, a special tax rebate for landlords who waive rental during the same period.

• Accelerated capital allowance and industrial building allowance for SMEs that incur capital expenditure to acquire additional equipment and building in the YA 2020.

• Ease the conditions for SMEs to claim the allowance for increased export. 

• Tax credit arising from overpayment of taxes in the past can be used as a tax credit for future tax obligations including for the YA 2020.

• Waiver or reduction in withholding tax and service tax on payments made to non-residents for online business promotion initiatives. This will help to reduce the cost of doing business as some SMEs are bearing the withholding tax and service tax on behalf of the non-residents.
• (Waiver of sales tax for taxable products manufactured from March 2020 to year-end.
• A longer and flexible instalment scheme for all kinds of tax payments, including income tax and customs duties.
• Suspension of civil suit proceedings for non-payment of tax until 15 October 2020 to enable taxpayers to focus on rebuilding their business rather than litigating in court especially for the first 6 months.
• Suspension of tax audits and tax investigations for 6 months until end September 2020 to enable SMEs to focus on their business. Criminal investigation for tax and custom offences can continue.
• Stamp duty waiver for financing documents executed between 1 March to 31 December 2020.
• Temporary waiver of service tax on SMEs involved in the service sector such as hospitality, food and beverage and consultancy with an annual income of RM 2.5 million or less in 2020.
• Temporary suspension of sales tax on products manufactured in Malaysia in 2020.

These proposals may help SMEs to weather the present challenges and express the Government’s empathy on the challenges faced by the SMEs.

* S. Saravana Kumar is a tax lawyer and partner with Rosli Dahlan Saravana Partnership (RDS). He was recently named as one of the top 100 lawyers in Malaysia by the Asia Business Law Journal.

* Yap Wen Hui is a legal and tax trainee with RDS. A barrister by training, she read law at the University of Warwick.

Malaysia Master Tax Guide 2020 launched!

Our latest Malaysia Master Tax Guide 2020 is up for sale! Thanks to our Consultant editor, Mr K. Sandra Segaran and our technical advisor, Dr Veerinderjeet Singh, our latest Master Tax Guide, updated for all law changes up till 1 February 2020 would be able to assist readers on the following:-

• Preparation on income tax return 
• Gives readers a clear understanding of their tax liabilities and entitlements 
• Helps to understand and mitigate the risk of non-compliance and unnecessary penalty exposure
• Helps to understand current tax laws and incorporates the latest tax changes made in the 2020 Budget
• Gives readers an understanding on investment incentives in detail with specific examples. 

Buy your copy today! https://lnkd.in/fssdJgQ

Lochana Nanthacumar

Content Management Analyst

Wolters Kluwer Malaysia 

Employment guidelines for dealing with the coronavirus

Author: Donovan Cheah (Partner, Donovan & Ho)

www.dnh.com.my

The Ministry of Human Resources has announced guidelines to employers for dealing with employment issues arising from the 2019 novel coronavirus infections (2019-nCoV) (“Guidelines”).

We have summarised the Guidelines below:

Medical examination

Employees who have returned from countries with 2019-nCoV cases should be examined immediately (at the expense of the employer) by a registered medical practitioner or by a medical officer to ascertain entitlement for sick leave under s 60F of the Employment Act (EA).

Paid sick leave during quarantined period

Individual Tax Reliefs: Yay or Nay

The Tax season is just around the corner. Let's take a look at some of the claims that are eligible to be claimed for a Malaysian Tax Resident Individual for the Year of Assessment 2019.

a) Self and Dependent relatives - RM9,000

b) Spouse/payment of alimony to former wife - RM4,000

c) Each unmarried children below 18 years old - RM2,000

d) Each unmarried children above 18 years old & receiving further education - RM8,000

e) Disable child and disable individual - RM6,000

f) Disable spouse - RM3,500

g) EPF contributions - RM4,000

h) Breastfeeding equipment - RM1,000

     * Child 2 years and below and claimable only for women tax payers once every 2 years

i) Child care fees- RM1,000

    * must be a registered child care centre and claimable for child 6 years and below

 j) Sosco - RM250

k) Life Insurance - RM 7,000 (Pensionable Public servant category)

                             - RM3,000 (Other than Publis servant category)

l) Medical Expenses - RM6,000 (For serious disease)

                                  - RM500 (Full medical examination) 

      For Parents          - RM 5,000 (For parents undergoing treatments/special needs)

                                                          

                                                              OR

                                  - RM1,500 (For mother) 

                                  - RM1,500 (For father) 

                                  

m) Private Retirement Scheme - RM3,000

n) Education and medical insurance - RM3,000

o) Education fees - RM7,000 

p) Net deposit is SSPN - RM8,000

q) Lifestyle - RM2,500 (includes reading materials, Purchase of PC, Smartphone/Tablet, internet bill and sports equipment.) 

r) Supporting equipment - RM6,000 (For disable self, child, spouse or parent)

Happy BE filing everyone! :-)



Lochana Nanthacumar

Content Management Analyst

Wolters Kluwer Malaysia